The Effects of Single Mothers' Welfare Use and Employment Decisions on Children's Cognitive Development
Chyi, Hau, Ozturk, Orgul Demet, Economic Inquiry
In this article, we study the effects of low-skilled single mothers' welfare use and employment choices during their children's early years on their children's cognitive development. We use participation in Aid to Families with Dependent Children (AFDC) and, after 1996, Temporary Aid to Needy Families (TANF) to represent welfare use. Before 1996, AFDC was one of the largest welfare programs in the United States. In addition to cash benefits, participation in the AFDC program often assured eligibility for other programs such as Head Start, Food Stamps, and Medicaid. (1) In 1996, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) ended AFDC, replacing it with the TANF program. Even though PRWORA introduced a time limit on welfare benefits, TANF is still one of the most expansive government programs, and participation in TANF remains highly correlated with other program participation.
Welfare is used mostly by low-skilled single mothers with low incomes, who are likely to be highly constrained in terms of resources to invest in their children's development. Welfare program participation can provide these mothers with monetary and nonmonetary resources that can be very important to early nurturing. But does welfare use benefit the development of the participating children through provision of these resources? We analyze the relationship between a mother's welfare use and employment decisions during the first 5 years of her child's life and the child's first observed standardized mathematics score from the Peabody Individual Achievement Test (PIAT-Math). It is important to identify contributors to early cognitive development since this has been shown to be a strong predictor of long-term achievement. In particular, early test scores are strongly correlated with educational attainment, criminal activity, salaries, and out-of-wedlock pregnancy (see reviews by Duncan and Brooks-Gunn 1997; Haveman and Wolfe 1995; and Currie and Thomas 1999). We use Math scores on PIAT test as our primary measure of attainment primarily because they have been shown to be predictors of not only later math scores, but also other academic achievement (for example see Claessens, Duncan, and Engel 2009 and Duncan et al. 2007).
We contribute to the literature in three ways. First, the effects of a mother's decisions in our attainment function are allowed to interact with the child's "observed" innate ability, which we will define later. This allows us to obtain distributions for the effects of work and welfare by children's innate ability, in addition to a single coefficient that measures only the effect at the mean level. To our knowledge, our article is one of few that allow for this flexibility. Bernal (2008) and Bernal and Keane (2010, 2011) find that the marginal effects of a mother's work and child care choices decrease with the innate ability of the child. That is, although the effects on a child with average innate ability may be small and positive, there are significantly larger, positive impacts for the children with below-average innate ability and large negative effects for children with above-average innate ability. Second, we model the child's attainment as a function of the mother's cumulative inputs. A child's attainment, observed when they turn six, is determined by the cumulative welfare use and work experiences of the first 20 quarters (5 years) after birth. The longer, multiple periods not only enable us to identify the effects using a much richer variation in mothers' decisions, but also allow us to investigate the influence of different intensity levels of work and welfare use. Third, we model multiple channels through which a mother's decisions can affect her child's attainment, including direct monetary benefits available for each child, parental time, and exemplary behavior (role model) effects captured by the mother's employment, and non-pecuniary benefits from in-kind transfer programs. …